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CORRECTED - UPDATE 2-Kimberly-Clark ups view on less currency pressure
July 23, 2009 / 11:51 AM / 8 years ago

CORRECTED - UPDATE 2-Kimberly-Clark ups view on less currency pressure

(Corrects first bullet point, first sentence and third paragraph after Reuters Estimates corrected to show that Kimberly-Clark earned $1.16, not 97 cents, per share versus estimate of $1.01.)

* Q2 profit $1.16/shr tops Wall St view of $1.01

* Q2 sales fell 5.6 percent to $4.73 billion

* Raises FY profit view to $4.10-$4.25 from $4-$4.20

* Shares up 2 percent in light premarket trade (Recasts, adds segment performance, CEO comment, stock move)

CHICAGO, July 23 (Reuters) - Kimberly-Clark Corp (KMB.N) posted a better-than-expected quarterly profit and raised its 2009 profit forecast as it plans to cut more costs and feel less pressure from the stronger U.S. dollar.

The maker of Kleenex tissues and Huggies diapers earned $403 million, or 97 cents per share, in the second quarter, down from $417 million, or 99 cents per share, a year earlier.

Excluding 19 cents in severance costs, Kimberly-Clark earned $1.16 per share, topping analysts’ average forecast of $1.01 as compiled by Reuters Estimates.

The results come a month after Kimberly-Clark said it would cut about 1,600 salaried jobs, or roughly 3 percent of its workforce. The company had already eliminated some 6,000 jobs and closed about 20 manufacturing plants under an earlier plan.

Earnings per share were hit by about 19 cents from the job cuts and about 25 cents from currency fluctuations.

Sales fell 5.6 percent to $4.73 billion, topping analysts’ average expectation of $4.63 billion. Higher prices were not enough to offset a 2 percent drop in volume and the hit from the stronger dollar, which cuts into the value of international sales.

Products such as Viva paper towels and Kleenex tissues have faced stiff competition from lower-cost store brands sold by retailers such as Wal-Mart Stores Inc (WMT.N) as consumers cut back. At the same time, Kimberly-Clark’s professional division has been pressured because the restaurants and other businesses it serves have been hit hard by the recession.

The professional business and the consumer tissue business felt the most pressure in the quarter. One bright spot was the health care business, where volume rose about 15 percent, as the H1N1 flu virus drove sales of face masks.

Earnings “should be up nicely” in the second half of the year compared with the first half of 2009 and second half of 2008, Chairman and Chief Executive Thomas Falk said in a statement.

The company said it now expects to earn $4.10 to $4.25 a share in 2009, versus a prior estimate of $4.00 to $4.20. The new forecast includes a hit of about 15 cents from job cuts.

It now expects sales to fall 4 percent to 6 percent this year, versus a prior expectation of a 6 percent-to-8 percent decline, as it expects less of a drag from currency.

Volume should be down slightly, the company said.

Kimberly-Clark also said it expects to cut at least $200 million in costs this year, up from a prior target of about $150 million.

Shares of Kimberly-Clark rose more than 2 percent to $55.70 in light premarket trading. (Reporting by Jessica Wohl; Editing by Maureen Bavdek and Brian Moss)

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